3 Most Profitable Business Models In India?

Introduction

After doing tax planning and providing accounting services for almost ten plus years now, I was wondering…

What is the most profitable business one can do in India?

However, thinking at a stretch and after a train of thoughts, I concluded that we could answer.

What are the three most profitable business models in India?

The three business models are:

1. Commission Based Business
2. Subscription-Based Business Model
3. Trading Based Business Model

But as I said, below is how I arrived at the solution.

Train of thoughts :

Where the new trend of startups and solopreneurs is on the rise, and more youth are considering testing new business ideas and doing a business out of them, is it possible to point out at least three businesses that can be a sure-shot way of making money if right and concentrated efforts are taken in those businesses.

However, after brainstorming and thinking for many days and looking upon many startups and businesses that I have personally come across in my taxation and accountancy practice, I concluded that businesses on their own are not right or wrong. Nor can we categorize them as more profitable and less profitable, as any business can let you earn money, but it depends upon the qualities of owners or as they call the main leaders of business, that what skills and experiences and systems they bring into that business and make it a money machine. It also depends upon what the leader or owner himself likes to do, of course, every person likes more money but the way one can earn it and grow it differs a lot. For example, some marketing field person can make a local door to door selling business or a real estate agency business very well, but if we tell him to do an office-based business of consultancy or analysis or for the matter any business which requires a person to be present at a single place for a long time like a hotel or small grocery store, then he cannot do it well. Instead, the former business can be very profitable for him, but the second business won’t be more beneficial for him. So we cannot say that a hotel or grocery store business is less profitable and wrong, it’s just that it’s not profitable for the personality of such a business owner who likes to market and talk to people and loves fieldwork.

In short, the main conclusion was all businesses are suitable and profitable, but there are some business models which are more profitable than the others. Here we can say that we can profit more in fewer efforts and time by using such kinds of models.
So without taking much time, let’s dive deep into what these business models are.

Three most profitable business models in India.

1. Commission Based Business :

We have always come across commission-based businesses and have paid commission in one or another way to someone for work.

As the business model suggests commission, is a business model where one does work for some other person for which he charges a percentage of the fee on some amount involved in the work.

The commission is a part or percentage of some amount and cannot be fixed.
These kinds of businesses are more profitable as parties can well quantify them before the transaction happens. Hence, the person giving this kind of service or product always knows how much effort should be taken or provided and how much he needs to earn to grow the business.

Generally, the examples of such kind of business are :

1. Real Estate Business
2. Stock Broking Business
3. Insurance Business
4. Ecommerce Platform Business

The peculiarity of this model is that as the buyer knows first hand what is the fee to be paid, he or she is well prepared, and half converted as a prospective client.

However, many business examples given above are hard to sell still, the commission model is always more profitable to both seller and buyer as it brings clarity to the table and both know what can be expected.

2. Subscription Based Business Model :

Subscription is a fee charged on a periodic basis in return of a service given for that period. Generally these subscription amounts are charged in advance well before the service is provided.

These are again a lucrative option for the seller because it fixes the revenue for him and well quantifies the efforts which he needs to take to provide these services.

Examples of subscription based model of business is :

1. Online Digital Magazines or Movies Subscription
2. Cable Network or Internet Service Provider
3. Annual maintenance contract of pest control

This is again a profitable business because generally the services provided every month are duplicate and hence the seller is on the positive side of the learning curve in this and can become a very good expert in a matter of time.

This model is profitable for buyers because they many times have an option to resubscribe or discontinue after each month. Hence it makes a win win situation for the both.

In India as the population is more this kind of business model is profitable even if a small fee is charged as subscription from every single person.

3. Trading Based Business Model :

Unlike above two business models this business model is more applicable for products based business and is more profitable for many reasons.

However the main reason it is profitable is because it has the benefit of a commission model but doesn’t have the responsibility of the subscription model.

You can see that in the subscription model the service provider or seller has the responsibility of providing a standard quality of services every month and if it is not provided then the revenue falls and subscribers leave.

Example of this model can be any grocery store or general supply store of daily consumables.

However in the trading model as we trade a product manufactured by someone else we don’t have the responsibility of quality of that product, we are just a middleman selling it for a fixed price.

Issue of this model is that it’s not easily scalable, meaning trading business can be good if you have more capital. Also if overheads are not handled very well the profit margins can be very less in such a model.

Closing Note:

As said above I have tried to conclude what are the best business models which can be more profitable in India and what is the reason for them. After reading them many might be in question that what are the other business models which are not profitable, to answer this we can’t make an exclusive list but an inclusive list to give you an idea is a business model having done for you services, retail hotel industry, retail fixed cost service, franchisee service etc. These services are not profitable from the point of view of the seller or business man and not from the point of a manufacturer.

In this article even if after reading thoroughly you won’t be able to find that aha moment or eureka moment where you have found something new but remember this article is to sensitise you on some topics which you already know, and help you cut off the time and effort which I have required to come to this concluding profitable business models.